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Financial Accounting4th EditionDon Herrmann, J. David Spiceland, Wayne Thomas 1,097 solutions Accounting: What the Numbers Mean9th EditionDaniel F Viele, David H Marshall, Wayne W McManus 338 solutions Intermediate Accounting14th EditionDonald E. Kieso, Jerry J. Weygandt, Terry D. Warfield 1,471 solutions Notes This preview shows page 7 - 9 out of 96 pages. 25. Which one of the following industries is most apt to have the shortest operating cycle?A. Toy storeB. Car manufacturerC. Local restaurantD. Furniture storeE. Plastics manufacturer 26. All else constant, which one of the following will decrease the cash cycle? Get answer to your question and much more 27. Which one of the following statements related to the inventory period is correct? Get answer to your question and much more 28. Which one of the following firms is most apt to have the shortest inventory period? Get answer to your question and much more 29. Which one of the following activities is most apt to reduce the inventory period?A. Replacing slow-moving items with faster-selling productsB. Replacing fresh foods with canned goodsC. Manufacturing a product for inventory rather than for an orderD. Increasing the amount of inventory on handE. Decreasing the number of times the inventory turns over per year We have textbook solutions for you!The document you are viewing contains questions related to this textbook. Expert Verified Chapter 16 - Short-Term Financial Planning30. Which one of the following is most apt to decrease the accounts receivable period? Get answer to your question and much more 31. An increase in the accounts receivable period will do which one of the following? Get answer to your question and much more
32. Suppose that Martin Metal Products changes its policy and starts requiring all of itscustomers to pay within 20 days rather than the 30 days that it currently allows. Which one ofthe following will result from this change? Get answer to your question and much more Upload your study docs or become a Course Hero member to access this document Upload your study docs or become a Course Hero member to access this document End of preview. Want to read all 96 pages? Upload your study docs or become a Course Hero member to access this document We have textbook solutions for you!The document you are viewing contains questions related to this textbook. The document you are viewing contains questions related to this textbook. Expert Verified How is operating cycle shortened?A company can reduce its OC in two ways: Speed up the sale of its inventory: If a company is able to quickly sell its inventory, the OC should decrease. Reduce the time needed to collect receivables: If a company is able to quickly collect credit sales more quickly, the OC would decrease.
What is the operating cycle of a company?An operating cycle refers to the time it takes a company to buy goods, sell them and receive cash from the sale of said goods. In other words, it's how long it takes a company to turn its inventories into cash. The length of an operating cycle is dependent upon the industry.
Which of the following will increase the operating cycle?The correct answer is option - Increasing the inventory period.
Which of the following would cause the operating cycle to decrease?When the accounts receivable is collected faster, the average collection period will reduce, and to compute the operating cycle we add the inventory holding period and the average collection period. So any action that lowers the inventory holding period or average collection period will decrease the operating cycle.
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Which industry is most apt to have the shortest operating cycle?
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